MIAN HAMID FAROOQ, J.---This single judgment shall decide the present appeal (R.F.A. No.237 of 2005) and the connected appeal (R.F.A. No.238 of 2005) as common questions of law and facts are involved in both the cases, they are between the same parties and proceed against consolidated judgment.
2. The appellants, through both the appeals, have called in question consolidated judgment and decrees, all dated 16-10-2004, whereby the learned Judge Banking Court rejected the plaint in.
Appellant's suit and decreed respondent's suit for recovery of Rs. 1, 414,219.
3. The appellants on 12-2-2002 filed the suit, titled "Multimed Marketers (Pvt.) Ltd. v. U.B.L." seeking declaration that mark-up to the tune of Rs. 10',76,130.84 being charged" by the respondent-Bank after 13-12-1998 is illegal, against the respondent-Bank before the learned Judge Banking Court.
The respondent-Bank, when served filed the application seeking leave to defend the suit, inter alia, pleading that the appellants availed the finance facility, they executed certain charge documents, the facility was renewed, the appellants committed default and in order to avoid payment of frivolously filed the 'suit. It was also asserted that the question of charging of markup after the expiry of period finance does not arise.
4. The respondent-Bank, on 14-6-2002, filed the suit for recovery of Rs.14,14,219, titled "UBL v.
Multimed Marketers (Pvt.) Ltd." against the appellants before the learned Judge Banking Court. The appellants contested the suit through application for leave to defend the suit agitating therein that they are not wilful defaulters, the respondent-Bank has illegally charged a sum of Rs.14,50,549.8 as mark-up after the expiry of finance period, the bank obtained blank papers from the defendants and subsequently filled those documents after the expiry of contract period. The learned. Banking Court, after finding that the plaint does not disclose any cause ci action in purported exercise of powers under Order VII, :le 11, C.P.C.. Rejected the plaint in appellant's suit. While respondent-Bank's suit for recovery of Rs. 14,14 2 I ) was decreed with costs and costs of funds, vide consolidated judgment and separate decrees all dated 16-10-2004, he ce the present two appeals.
5. Learned counsel for the appellants contended that the respondent-Bank filed the application for leave to defend the suit in appellant's suit, but the learned Judge, Banking Court, instead of deciding that application, proceeded to reject the plaint through the impugned judgment, which .
Is not sustainable under the law. He has added that the learned Judge, Banking Court was under a legal obligation to firstly decide the leave application and then to proceed with the suit. As regards respondent's suit for recovery, his -contention is that the amount of Rs.8,19,823 charged by the respondent-Bank as mark-up from January, 2000 to 28-12-2001 was illegally debited, as no disbursement/withdrawal was made. The learned counsel for the respondent-Bank has, however, supported the impugned judgments.
6. We have heard the learned counsel for the parties and examined the summoned record. Firstly coming to the appellant's suit, the respondent-Bank, when served in appellant's suit for declaration, filed the application seeking leave to defend the suit. Admittedly, the said application was not decided by the learned Judge, Banking Court, while he was obliged under the law to, firstly, decide respondent's application for leave to defend the suit on its own merits before embarking upon the suit. If the learned Judge Banking Court was of the view that substantial questions of law and facts were raised by the respondent-Bank, then at best, leave to defend could have been granted to the respondent-Bank but at that stage, neither the plaint could be rejected 9or the suit could be dismissed. The learned Judge, Banking Court has thus violated the provisions of section 10(8) of the Financial Institutions (Recovery of Finance) Ordinance, 2001. The questions involved in the present appeal were examined by this Court in the cases reported as "Messrs Waheed Corporation through Proprietor and another v. Allied Bank of Pakistan through Manager"
2003 CLD 245; "Sheikh Muhammad Kashif v. Askari Leasing Limited through Manager/Chief Executive of Branch/Recovery Officer" 2004 CLD 1645; "Falcon Ventures Pvt. Ltd. Through Chief Executive, Iftikhar Ahmad v. Punjab Banking Court No.11, Lahore and another" 2004 CLD 726 and "Manzoor Ahmad and another v. Agricultural Development Bank of Pakistan through Manager, Nankana Sahib Branch and 3 others" 2005 CLD 653, which principles of law are completely applicable to the facts and circumstances of the present case. The impugned judgment is violative of law laid down by this Court in the said judgments. .It has been held in the case of Messrs Waheed Corporation (ibid), which has been relied upon in the case of Manzoor Ahmad and another (supra) that "Undoubtedly after the grant of leave to defend and treating the leave application as written statement, the respondents are within their right to have filed an application under Order VII, rule 11, C.P.C. And if the Court reaches the conclusion that the case falls under any of the clauses of Order VII, rule 11, C.P.C., of course, plaint could have been rejected but in no way before the grant of leave to defend the suit."
7. In the above perspective, we have examined the impugned judgment and find that the learned Judge, Banking Court, while rejecting the plaint in appellant's suit, has committed illegality and thus the impugned judgment is not sustainable.
8. Now dealing with respondent-Bank's suit for recovery. The learned Judge, Banking Court without rendering any reasons or/and adverting to the grounds raised in appellant's leave application has abruptly held that appellant's leave application does not raise plausible or substantial questions of law and facts. It is evident from the tenor of the impugned judgment that respondent's suit was decreed in view of the dismissal of appellant's suit for declaration. It appears appropriate to reproduce the relevant portion of the judgment which reads as follows:-- "So far as the suit of the bank is concerned the PLA filed by the defendants as discussed above raises no plausible cause or substantial question of law and facts, as such, same is dismissed. The suit of the Bank in view of dismissal of Suit No.252 of 2002 is decreed for the recovery of Rs.14,14,219 in favour of the plaintiff and against the defendants jointly and severally with costs and with costs of funds to be determined under section 3 of Financial Institutions (Recovery of Finances) Ordinance, 2001 in case of failure of the defendants to satisfy the decree within the stipulated period, the suit shall automatically stand into execution petition as contemplated in section 1.9 (ibid). Particulars of the property and other assets of the defendants/judgment-debtors shall be 'led on 9-12-2004."
9. We have examined the contents of the leave application filed on behalf of the appellants in respondent's suit and find that it did disclose substantial questions of law and facts, in which evidence needs to be recorded. The case of the appellants, inter alia, was that the financial facility expired on 31-12-1998 and thereafter, it was never renewed, therefore, the bank is not entitled to charge mark-up after the contract period. We feel that interest of justice would\ have adequately been met if the learned Judge, Banking Court granted leave to the appellants subject to the imposition of some conditions.
10.
16. In the above backdrop both the the following manner:-
(i) The appeals are allowed and the judgment and both the decrees set aside; appeals are decided in impugned consolidated dated 16-10-2004 are
(i) Both the suits and the leave .Applications filed by respective parties shall be deemed to be pending before the learned Judge, Banking Court, who shall decide the same, afresh, after hearing the parties in accordance with law and in view, of the observations hereinbefore made; and No order as to costs. .